Bank of England Drops Stablecoin Holding Caps but Keeps $53 Billion Issuance Limit
The Bank of England has scrapped its proposed holding caps for UK stablecoins, changing them with a short lived £40 billion ($52.9 billion) restrict on how a lot of any single systemic coin could be issued.
The change arrived Monday with a draft Code of Practice. It eases a rule that anxious issuers. Yet it leaves Britain capping issuance of its personal foreign money stablecoin, one thing neither the US nor the EU does.
From Per-User Caps to a Single Ceiling
In November 2025, the central financial institution proposed limiting people to £20,000 and companies to £10 million per coin. Issuers known as the plan expensive and laborious to implement.
The reversal adopted stress at house. In June, the House of Lords Financial Services Regulation Committee urged the Bank to rethink the boundaries. It warned they diverged from international norms and had alarmed crypto founders.
The Bank has now swapped these proposed holding limits for one £40 billion ceiling per coin. It says the cap shields financial institution lending whereas letting households and companies transact freely.
Why UK Stablecoin Rules Stand Alone
The distinction overseas is sharp. The US GENIUS Act, signed in July 2025, calls for full money and Treasury reserves but caps no issuance.
Europe’s MiCA stablecoin rules cap solely foreign-currency cash used closely for funds, a brake meant to defend the euro. They place no ceiling on euro stablecoins themselves.
That leaves the UK alone in capping issuance of a coin in its personal foreign money. It is fencing a market that hardly exists in sterling.
About 99% of stablecoins in circulation are dollar-denominated, the ECB reported in November.
A ceiling on provide restrains the issuer, not the consumer. Even that softer kind of stablecoin holding caps has no parallel amongst large economies.
The Bigger Test is Tokenization
Issuers should again cash with 70% short-term UK authorities debt and 30% in deposits on the central financial institution. They can’t pay curiosity, although payment-linked rewards keep allowed.
That backing rule reaches into the gilt market. The Treasury and the Debt Management Office have flagged sterling stablecoins as attainable structural demand for Treasury payments. Both plan new short-dated issuance to fulfill it.
Coins used primarily for buying and selling, equivalent to Tether (USDT) and USD Coin (USDC), keep underneath the Financial Conduct Authority. Redemptions should clear inside 24 hours of an entire request.
The unresolved query is whether or not these cash can settle wholesale market trades. That reply will form the nation’s tokenization plans, and the Bank says the work continues.
“This is a serious milestone in delivering better selection and innovation in UK funds… This is really a world main regime,” Sarah Breeden, the Bank’s Deputy Governor for Financial Stability, said the regime builds belief for a brand new kind of cash.
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Feedback on the draft closes 22 September. The Bank goals to finalize the code by the tip of 2026. That retains the UK’s 2026 stablecoin timeline on observe for the primary issuers in 2027.
The provide cap lasting that lengthy might resolve if sterling stablecoins scale at house or develop elsewhere.
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